Although the second wave has emerged to be more fatal than the first, its economic impact would presumably be limited in comparison
With the second wave taking a fatal form, the common people started feeling that the Indian economy is again moving towards an uncertain scenario, and the growth rate may again turn negative.
The Covid-inflicted lockdown resulted in a contraction of 23.9 per cent in the gross domestic product (GDP) in the first quarter of FY 2020-21. However, economic activities resumed by the third quarter and the economic situation had become almost normal in the fourth quarter of the same financial year. Merely a 7.7 per cent contraction in GDP was projected by the economists in the FY 2020-21. Not only this, the economic survey estimated that the GDP will grow at the rate of 11 per cent in the FY 2021-22.
The government, economists and domestic and global rating agencies had a solid basis for visualizing a positive scenario in the Indian economy. The record collection of Goods and Services Tax (GST), improvement in the collection of other direct and indirect taxes, return of workers to their jobs, demand and supply boom, growth in employment generation, increase in electricity and fuel consumption etc. have made the economy stronger.
The Coronavirus started spreading its wings in March this year even more aggressively. It transmits faster and destroys human immunity in a short time. Lungs become weak, leading to rapid depletion of oxygen level in the human body. The death toll is very high this time and the number of daily cases has reached above three lakh.
The GDP growth is expected to contract again, but I think the economic situation will not be as bad as last year. The chances of nationwide lockdown are less this year. At present, the Corona outbreak is at its peak in 11 states, of which Maharashtra ranks first.
There is still no complete lockdown in Maharashtra, but strictness is more than a night curfew. Owing to this, the number of infections in Mumbai decreased to 5,888 on April 24. The factories are partially functional. Essential commodities are being produced at almost the full capacity; the restaurants have also not been completely closed, and food is being parcelled from hotels.
Some migrant labourers from Maharashtra, Delhi, Gujarat etc. have returned or are returning to their villages for the fear of lockdown, but their number is limited to a few lakhs. Corona's havoc is high in industry-focused states as compared to other states where the impact is less. In some states like Odisha and Rajasthan, only a night curfew has been imposed, while in states where the situation is more serious, lockdown is also being imposed, leaving a mild negative impact on the economic activities.
The pandemic will certainly have some negative effect on the economy but it will not be very destructive. Perhaps this is the reason why India Ratings & Research has lowered its revised growth estimate slightly from 10.4 per cent to 10.1 per cent for FY 2021-22, while CARE ratings lowered its GDP growth estimate from 10.7-10.9 to 10.2 per cent for the FY 2021-22.
The government has now allowed adults over 18 years to get vaccinated. It has also permitted the use of the Sputnik vaccine to manage demand-supply. According to the doctors, the efficacy of available vaccines is between 80 and 90 per cent. Their side effects are minimal. Almost all vaccinated people are benefiting from these vaccines. The increasing steps of Corona in India can be stopped with their use. Therefore, people should go ahead and get vaccinated. The drugmaker, Zydus, has claimed that Verafin medicine has been able to cure Corona patients. The drugs regulator of India has permitted its use. The pressure on the Remdesivir will be reduced and its black marketing will be controlled with the introduction of this drug.
Corona's impact on agriculture has been minimal. Transport services between states are functional. It is, therefore, expected that the performance of the agriculture sector will be better than last year. The Skymet and India Meteorological Department (IMD) have forecasted a normal monsoon this year. This means that Kharif and Rabi crops will be good, thereby reducing food inflation as well as strengthening the economy.
Today, the leaders should exemplify behaviour in front of the common people who follow in their footsteps. The way leaders have broken the rules of Corona's guidelines in the elections in five states is not appreciable at all. When the big leaders of the country do this, what will the public do? Conducting Kumbh was another big mistake that has allowed Corona to become strong.
Corona is causing more damage this year but it will not be able to destroy the economy completely because we have vaccines, medicines, and awareness. Working with coordination will bring positive results. As a result, the government will not resort to complete lockdown and our economy will not come under pressure.
Views expressed are personal